MMS - Earnings call transcript Q4 2019

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Operator

Greetings. And welcome to the MAXIMUS Fiscal 2019 Fourth Quarter and Year End Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator instructions]

conference recorded. this reminder, a is being As It Lisa Relations. Miles, my pleasure your host, to introduce Senior is now Vice President, Investor go ahead. Please

Lisa Miles

today Financial Officer. Good us. and you thank and is me CEO; Chief morning President Bruce Nadeau, for Rick Caswell, and With joining

be remind statements will we are may Actual and in like only made to of differ being remember discussed in our those of results a including risks that predictions. face, everyone I’d nature. result materially number Please a statements XX.X today forward-looking such of filings. as that events Exhibit SEC

encourage contained as with to required to update these today Forms release We except not SEC. review reflect to most and revise or subsequent XX-Q you does the obligation the in our recent any statements our circumstances in information by forward-looking The earnings or filed events XX-K law. company and assume

Today’s this results to presentation its our financial meaningful of in non-GAAP quality our the identifying analyses results financial comparisons. Management period-to-period may providing information this of performance, information trends information. uses may in gauging contain in and and be believes internal investors informative

most measures quarterly a the of see this earnings company’s For document, reconciliation press please in presented non-GAAP the release. recent

hand call will I that, with And over to the Rick.

Rick Nadeau

dividend. We services, an XXXX related year our our shareholders healthy and plan progress cash on expand capital to and to consistent key was management’s generated Fiscal returned Lisa. clinically largest execution acquisition, in Thanks markets increase strategic grow flow, transformation, lead by characterized and through adjacencies. and our additional demonstrated completed a our priority to digital

U.S. Centers November. driven earnings by XXXX fiscal the Federal acquisition and finished We the last of revenue Engagement Citizen growth with

to fiscal to billion. our company billion revenue in billion, fell guidance $X.XX range XXXX morning, total which noted press this our within As $X.X increased of $X.XXX release for

bottom operating XXXX line, total margin XX%. the company fiscal was for On

outside the Services downward Health on United U.S. income and Human we experienced States. Services and pressure good our delivered Federal margins, pretax our U.S. While segments

As for $X.XX. to to fiscal per share year $X.XX increased of earnings compared XXXX prior expected, diluted XX% the

rate yielded an effective work Our and XXXX from R&D tax credits fiscal benefited rate XX.X%. of credits, which

last results and XXXX will Health Services Health to segment my the with in Human U.S. segment. on I to Human Services for Revenue comments $X.XX organic. quarter billion extended. to the fiscal start and was revenue decreased compared segment U.S. The is year. anticipated due period that to contracts year rebid decrease compared the X% that noting was were prior all fourth increased and or worth It

and in U.S. for year. margin strong from full margin resulting XX.X% our with a expectations to Federal acquisition XXXX delivered synergies segment. line which Services in segment our operating compares the of XX.X% cost benefited from was year The fiscal November prior also operating for XXXX, the segment’s The

billion, increased $X.XX driven contributed of Revenue Services quarter. the by for lesser to Federal organic million acquisition $XXX U.S. in segment the to and for fiscal primarily the fourth $XXX fiscal The for year a acquisition revenue full and million by the extent XXXX growth.

offset was year, revenue life full for which in is XXXX. acquisition, X% and delivered this Census the contract temporary our segment by $XXX new increased Absent of organic the contract million approximately this that the by year over fiscal acquired over segment for with last driven The expectations work of ended. revenue line work tracking for

XX.X% delivered a Services Federal for operating margin U.S. fiscal XXXX.

segment’s the mix. contract fluctuate reminder, margin As due a to may

margins contracts carry contracts. typically lower performance-based cost-plus than example, For

margins will full-year pressure ramping be and contract segment. to the operating a some Census on will fiscal increase forward of contracts in weighted be the heavily Looking XXXX, revenue mix acquisition. downward This contract will that from revenue cost-plus towards means more the while with our there

of fiscal XXXX. three XXXX compared primary to a For result $XXX drivers. fiscal million $XXX decrease was segment, Outside in revenue the the million as was U.S. The

revenue to by Kingdom. $XX contracts due and in the declined choice the United work program expected First, of conclusion the work million

impacted currency was $XX welfare-to-work Second, million by And contract. million. foreign $XX unfavorably our translation the declined third, of in Australian segment by pass-through approximately revenue

The was year X.X%. margin for the operating segment’s full

in services contracts toward are they in we employment in earnings quarters, unfavorable the progressing the As the prior new Kingdom near-term. disclosed to are but United profitability,

impacted we economies As segment’s we results operate. of discontinued, most an discussed quarter, contract of Overall, in the fiscal to second the accretive negatively component was Employment half a business of Canada continues which our affected the year. last unexpectedly by be robust in geographies Services in

lower on environment prior discussed a populations challenging volumes, harder-to-serve macro in keeping As this more calls, sustainable led caseloads, for and smaller employment. to has dynamic

the operated segment goal the the towards business near-term. of While moving managing the in are margin fiscal below operating a for we our X% year, expectations with

next targeting north operating we of three trends the length role up segment X%. high-single time move margin but digits are in to then the to Over and will a to the it may years, move take this economic play XX%, of

flow the cash turn and items. to me sheet Let balance

XXXX, from both fiscal estimates free flow flow For and metrics. exceeding our $XXX was and operations million our respectively, $XXX cash cash for million,

at XXXX XX from resulted non-cash the days, at days was recognition four balance beginning which of September the of adoption standard DSO item implemented Our a of fiscal the new XX, which was XXXX. revenue

to part compared expenditures on related last discussed our the increased and as increased additions XXXX call. the fiscal of for prior contract investment asset microservices to due to fixed expenditures Census quarter’s software capitalized Capital year

XXXX, During implemented the a accounts system. second half of payable new we fiscal

XXXX, XXXX. which estimated our million, September $XX cash higher-than-normal for to cash was operations million payable XX, flow by $XX accounts free our an reported from and increased fiscal of As flow

this operations from the of half in flow We as first expect the normalizes. impacted cash XXXX fiscal flow will negatively and free be cash

long-term and We sensible We with and as cash to equivalents. approach deliver capital value. committed finished and create aim shareholder a $XXX deployment remain of XXXX fiscal million cash disciplined to to we

remains Our have one our M&A priorities priority. number changed. not

our technology competitive pleased enabled position, improve new with base, U.S. us and Federal acquisition to November, bring our We $XXX million expand on scale, last customer are build the which platforms.

sustainable enable long-term continuing build that build new to digital enhance by to objective capabilities, into find organic clinical extend M&A Our scale, and adjacencies. our growth and is us to targets

Board annualized on a to per an evaluates increased share. dividend The cash dividend $X.XX cash XX% We regular basis. our our

share a reasonable for nature buyback is program remains of with avenue conscious but cash, providing it viable shareholders we in and opportunistic uses Our returns. of are

XX, we $XXX approximately September At authorized remaining million Board had under our program.

people, We engagement. our will to to to how into maintain fundamentally investments the We ensure competitive technology process, to program ultimately governments’ ongoing and and deliver invest reshape business and continue to make delivery that approach as continue edge, we consumer value we work clients. in our

for are we closing, XXXX. fiscal establishing In guidance

and increase driven principally with range segment. Services U.S. XXXX, the billion by $X.X billion, between year the fiscal For we revenue expect will $X.XX Federal

the weeks and the November XX.X% fiscal $X.XX. and additional from Services six We of currently from Census U.S. an the range diluted XX.X%, operating anticipate growth Segments an acquisition. to most an the range revenue will Services between operations pleased between earnings U.S. at XXXX in increase Segment, $X.XX from Human implies and reflects Federal contracts We notably, Health and margin and cost-plus were XXXX. contract in the organic per of Federal U.S. Services the and in share the This see end

million growth XXXX, we have as sight ramps contract full of fiscal from it to $XXX good of the X% organic or terms X% to Census of capacity. year-over-year with In line

fiscal expect our Census You little to will revenue note back but in it we fiscal projection XXXX, of make XXXX. for fell in short a

growth X% midpoint is to remaining revenue forecasted The of the of new guidance of $X.XXX XXXX achieve fiscal work. billion

of work slide crosswalk assumes We accompanying the Our exhibit guidance this weighted show forecasted to probability in the new of on a call. the revenue variety opportunities. this math presentation

periods the would color thought fiscal We be it important provide on within to XXXX. some

of our contract scale the quarterly and some results. the and will First, program revenue in on the will of profit this timing lumpiness cause Census given fluctuate the

on we in know the will of total company the are half we be based year. stronger what today, Second, that first fiscal XXXX in forecasting revenue

from benefit open As from Affordable a first Medicare Care period the in and our quarter enrollment Census reminder, the favorable contract. the seasonality we and under Act will

expected driven Census fiscal highest revenue, by the of to levels is currently second Our the generate contract. quarter

of total fiscal quarter mostly fourth on quarter bottomline, and comes than due work the the new earnings On our sequentially company maturity to be mix as line. will first program in contract XXXX, lower

third We our XXXX. of expect earnings fiscal to grow sequentially quarter through

the will to June our a down Our result, fourth wind XXXX, as third in that be Census begin sequentially quarter lower guidance quarter. contract XXXX will assumes than fiscal and also fiscal our

be to some would useful it segment direction operating provide it thought to fiscal also for as relates We XXXX. margins

Health and Human the segment, U.S. the margin For XX% operating are XX% anticipating to in Services range. we

revenue XX%. segment expected range the from portion contract. in to impacted notably, Services X% increasing and operating be U.S. the of by lower the Services segment between cost-plus Federal contracts margins revenue margin Federal Ultimately, the the Census from will most fiscal reflects The XXXX, cost-plus in are contracts. margin operating U.S.

goal to the Outside and the segment future I trajectory digits, digits realize mentioned to continue periods, in XXXX in second by fiscal mid-single U.S. the low-single Our as the perform half that expected earlier. is of with

For rate and the stock average tax further outstanding to shares million, the XXXX, income between assuming XX.X%, approximately and purchases. fiscal be year XX.X% to no range weighted we estimate full $XX.X

For we flow and free and range $XXX and $XXX between expect million cash we XXXX, cash million, $XXX from expect flows to million. between cash in range fiscal flows million $XXX to operations

our that an fiscal the the We of of addition, increase provides most will we throughout by fiscal Census know result XXXX, offset up year XXXX with receivables payables. based In insight what today. significant you ongoing contract hope into in ramp partially on in

And to call turn with Bruce. will that, I over the

Bruce Caswell

morning, and Rick, everyone. good you, Thank

of his future Rick substantial for progress tenets key year position noted opening our on success. we made in the strategy to fiscal As MAXIMUS XXXX, long-term remarks, during

served examine are markets aligned have When how through best are macro to challenges programs. are clients address seeking you consumers plan our engaging an government how with the how evolving, improved with and trends, we the in our experience government

services. populations of intersection demographic at health opportunity with services and complex the we deliver an trends clinical BPO heart of to of With aging see digital needs, more the

three Today, year. on you trajectory these take to track strategic our evolution the I our provide to time further and new progress goals support and towards digital of transformation, the into expansion, our commentary clinical how moving market wanted fiscal

address like cultural technologies would services operationalizing digital our defining transformation I lead We digital or maturity by government and innovations. towards help these to operate. and shift clients the disruption within we First, digital towards

with two We digital objectives our efforts. primary seek

a aim we First, to citizen unique experience. deliver

operate to program and innovation to our smarter, Second, we overall propel use using technologies that digital productivity. overall tools our improve efficiencies, and

meeting better with their are unparalleled delivering and and lowering where on computers while clients. government our for By costs phones, tablets, efficiencies service, providing we citizens are they experience a

is tools integrate more are apply result We security and optimize that workflow. The we that seeing engaged systems, innovative maintain through digital channels. more citizens with and existing

And choices. doubled Medicaid North Carolina, to enrollment channels Virginia digital In applications for Medicaid. completed XXXX more their digital between XXXX open of over XXXX, For enrollment volumes channels instance, XX% Louisiana used than year. digital and in we enrollment by open during beneficiaries Medicaid were last doubled that research

XXXX October first Award XX Medicaid News the during simplify of a applications XXXX the on app towards November since enrollment globally in Store the Healthy this in promote XXX prestigious distinguishing for PR that category growing with the two interaction Google As result enrollment top app the our XXXX government apps have have Play in as trend programs, been consumer mobile pioneer. the country the and Louisiana trending a Digital we launched digital developed were that websites Medicaid mobile mobile and MAXIMUS we awarded digital, app,

and Our reduce processing time for types all our clients. We backlogs. can greatly real prevent documentation, reduce digital of for drive value helping efforts

manually repetitive utilize We use improve most tasks the and automate profitability, most are efficient tax able offer to dollars. of to intensive importantly, staff, better

$XXX security Service awarded our as of were result the the strategies new program to our Security years. that cybersecurity This contract, management five total to vulnerabilities cybersecurity Implementation we has for Revenue environment. operations. million ITSI a Information am or value X share contract pleased is of paramount award Technology IRS also within a IT Digital Internal implement over I to capabilities, address

additional also success illustrated Our two is patents awarded U.S. by to MAXIMUS.

recognizes performance lost our increase productivity optimization and The monitoring, first pinpoint staff in capabilities operations. we streamline to developed patent

and monitor anomalies patent occur for detection such defect business alerts task to whenever stuck as our second within queue. a tracking of The the in becomes real-time enables processes health maintain them by when receiving a and process projects

analytics products on These BPO patents analysis and it efficiency. They to contact services. analysis foundation extend the process of build of center in our proprietary our and agent are differentiate that the embedded

government our clients another, provide ability scenarios, to a the Complementing easily how one policy changes, investment our which what-if program to run such major world real MAXIMUS as collective technology visualize and change enable three could patents their operations. and impact or understand

of performance our management analysis projects initiatives. value our allows across into from insights to of new and programs integration data for Continual and the outcome extends metric behavioral operational

we these that and through reductions workflow, it’s while to our XX%, are able XX% Further, matter resource customers. of put, optimizations improving innovations for deliver can cost these like achieve to outcomes that utilization quality. Simply

clinical more complex for Turning dimension. trends challenged public are with services finding address of now cost with These a healthcare populations, and demand and a BPO responsive effective health clinical to to more imperatives. individuals to underpin population manage way governments with evolution, and macro aging needs

year. By strength ranging case employing management determinations social health to outcomes, fiscal I from a benefit the to eligibility we as they highlighted to address earlier our program of as assessment, clinical natural engagement, and disability in partner consumer long-term issues the are services governments in determinants

with Independent adjacency total York a in this of awarded were $XXX California this earlier for the this IMR million year. assisted New contract. in We further recently currently advanced this Medical estimate fiscal We value rebid. contract or California win performance-based a and XXXX five-year with solution Review We first

clinical support our our tool a robotic to and sophisticated environment provides fully staff. with Connecting artificial paperless clinical digital decision portal a that automation, intake created and web-based we process supporting document solutions a intelligence have

transition discussed maintain assessment clinical also satisfying are patent on retrain capabilities submission and This a our digital to workforce, allowing and and yielded of recent overhead I strategic cycle integration We to has which costs us our and a through in to XX% remote work. more saving time reduction optimizations, earlier. staff able them

order implement receiving by and work Services Healthy state services residents this Plan their extension state of contract, we Medicaid comply Health health Michigan Human with an sponsored requirements Department qualifying work Michigan for to enrolled in Michigan awarded Through were to requirement will assist beneficiaries. in we insurance Additionally, the continue to coverage. the activity

outbound value the call March and With million SMS of of center dialing total inbound the XXXX, $XX self-attestations, extending scope work the includes contract contract reminders. through operations,

our as who in overseas, land of welfare through program to receiving and Moving long-term support. placement, have The recently in works more job program. said on goal been reduce require is years, serving benefits, have beneficiary’s social we jobseekers expand Arabia, number Saudi’s the and Saudi for to training we our awarded the fundamental Most welfare geographies. employment specialist

target Taqat seeking is unemployed are includes program those and market than led support. skills total which program our population serves two The million years. This training demand The a job for addition to in current placement $XX.X training soft serve contract, value different actively work. who will contract and

Moving billion awards, on XXXX, to fiscal awarded not contract new at for been had but Further, contracts another were XXth. total at of signed signed. $X.X XXth, $XXX of September awards yet value that been have there September worth were million

to of attention pipeline Let’s turn our sales our opportunities. addressable

opportunities, billion pipeline contract reported quarter. Our third total XXth work. $XX.X at value compared was the total Of in of billion, to $XX.X sales our pipeline represents September new XX%

new sales an quarter, addressable of converting is noted pipeline integral organic into part opportunities last I the returning As growth company our to of awards.

we as continue areas as expand provide resources, meaningful winning well to invest approach, work. our new of support other our business part and development to As that also

In digital continued key clinically shown grow management’s strategic priority closing, have and markets plan to transformation, expand and a adjacencies. progress in our on related services we lead

our areas. clinical sustainable As targets Rick capabilities out, long-term and build that M&A into us, priority enable aim build remains scale, continuing and to we pointed by us to extend growth a enhance find organic to as digital new for

programs want their government to and every providing dedication I to service the customer globe connecting Lastly, around people superior thank to and day. for work continued hard employees our benefit

we Operator? will up Q&A. open the that, with And for line

Operator

today from Richard Thank Our Canaccord question Instructions] from coming Close Genuity. you. is [Operator first

now is live. line Your

Richard Close

you clinical was help digital wondering and of with if out the for could sort the Thanks questions. the us evolution. I Great. transformation Bruce,

in transformation, profitability think Specifically, company? for am digital on terms you your of how trying I much for that well, to the maybe opportunities the revenue incremental driving increased gauge provides and of, first competitiveness versus do on increasing pricing is initiative

Bruce Caswell

started, Hey. digital drive that Clearly, for the It’s going digital back highlighted. profit improvement. how Richard, there question because help several our are in to you office drive strategy great looked operations, we process thank components the good got you that’s us and we question. at efficiencies have as really to could a transformation morning and

allows the workflows also do efficient It to productivity. more that and drive create which for workflows we redesign us greater work can

us competitiveness enables obviously that maintain to expand profit can of All more invest and expand and markets. generating also competitiveness better margins, that generate we to into

that process talk driving Anywhere, progress the their the we areas really that to developing out have there, post to Recently, of some in made am kind about automation. like we we one and the that bots and MAXIMUS of forth. pleased Automation savings I robotic of big case and study tool been the with of with work have elected RPA have been implementing so vendors

important -- component there’s that’s So to definitely it. an

lot same Also and assure citizen can in to Columbia. and been drive doing improve quality of comes to have through working operations, roll is our critical their time, an to contracts. we we are experience, the at British in held improve a illustrate are the can in you work SLAs the especially But that scope and when from example how we more which I’d expansion those the we well use efforts, revenue as automation quality and

to a difference got what really multichannel. of customer kind and there We omnichannel is bit and omnichannel distinction, have make contact of a between an platform center a there; is

one it seamless. behind platform and scenes begin the process that relatively implies omnichannel transaction another, on can a that it’s citizen there’s modality complete in in An so going a choreography and

might channel is So over previously. re-authenticating might that electronically or e-mail aware through not, a and agent of citizen you been had voice people serving be for that correspondents an have chat example, a are as

a one, Number platform to face received be reasons. authenticated It’s government a literally go video implemented their as face. important platform. benefit two they In card to British for citizens as to we a video chat Columbia, historically had or soon office authentication and health

So, through you government a video have in many to They and instances that traveling chat, to often do can people offices. fantastic. taking in rural buses hours which around get areas town is now

cases receive to Government the have studying to the out difficult use are started students implemented back if which that your one that’s so students really in of thinking to come what till get of are you wait student there to break we for for of then authenticate your country very forth could apply good country many; enables that themselves they funding, Historically, and you are you country other citizen have experience. outside loan a this the and for, government it’s and already possibly sitting delay in are use and and and are and loans. next to not your a apply

figure where example, if to way a small one will I very A out use to with applications, you government and put you the absolutely work grow but that’s additional and in platforms place, think collaboratively these cases business.

your of you help so component I can I and think side other there? question how was clinical The the

Richard Close

get sense digital Yeah. and how the then much contracts you company’s clinical go think transformation I of and to overall was you just with competitiveness like evolution, -- can trying increases the guys after? that just the

Bruce Caswell

are evolve deliver that with the while required, I’d contract there’s can our clinical that on complexity a as high A Health be by increased programs companies service in in a levels of at the domain having continue can great that Assessment quality United the and work would the requirements no are highly the operate Well, Kingdom. competitiveness the trained few capabilities, done that a Services staff. level, of there clinical Advisory we scale example and that such say, because doubt company to we

related at delivery, assessments screening certain look are direct for services looking we assessments investments to or for fitness at we rather it’s whether where markets, clinical as providing care but necessarily not additional to Similarly, related duty clinical or individuals applying benefits. pre-employment

in work mean, go we further, we now by aperture, strategy -- are opening on business. the that doing right That our some and can further I health-related evolving Federal even

to are five next over the opening two years that years new course quite substantially. seeing markets We the of

this becoming the in we more exciting am work we clinical and direction that markets. I company confident aperture and adjacent the pivoting So, opening that in will reposition into by the do, new

call us deliver at or digital our I relatively BPO, clinical in think my this, I in makes to technologies the said it ability unique of services and as remarks, scale. that combination clinical as we

Lisa Miles

that Does the question? answer

Bruce Caswell

Does question? that your answer

Richard Close

just we driver work pipeline the then follow new And got up, going the over good. a have be information new new reemergence to definition That’s year, the last organic and of how term? this the to as the over year obviously, you of provide in maybe of a pipeline, growth. in much longer or the breakout terms terms any maybe -- is us versus how Is sense of next two there that is can near-term the

Bruce Caswell

are think, release, the of will helpful a in have billion specifically, proposals towards some that and billion $XX.X pending few the that question $XX.X pending, tracking. -- There’s answering least Yeah. pipeline is decision, press $X.X data, I Richard, go is we of our remaining got and steps that billion proposals at in opportunities prep $X.X billion,

And noting pipeline. this terms out we that the due probability years is a weighted not pipeline and of it’s looking total are again that worth in two

So, programs values not can definite. become the either as those in pipeline as have flux farther change, or identified the stages, less stage, what we out as uncommon more it’s opportunities of to out and call definite move

Richard Close

Okay. Thank you.

Lisa Miles

Thanks, Richard.

please. question Next

Operator

Securities. from from Our next question Strauzer is Charlie coming CJS

Your is live. now line

Charlie Strauzer

Hi. Good morning.

Bruce Caswell

Good morning.

Charlie Strauzer

could of us I implied First you that’s quarterly with the relating extra thank info guidance, hoping that cadence us you the provide on was you all, guidance. detail some that gave for but to additional the within the

Bruce Caswell

Charlie, to to going one. address am ask I that Rick

Rick Nadeau

operations pre-peak the does complications. recognize Charlie. create is many and XXXX fiscal that ramp then and into go in a has being during a Thanks, dynamics to expected Census mid-year is the ramping year program We contract large that some year Sure. to down

should fiscal what half to some revenue a as profit XXXX. the half will revenue timing we results. that result second the in fluctuations first fiscal program, Based the be XXXX greater the the of compared on cause for think know I of of of and quarterly our today,

sequentially compared contract XXXX. We by under of driven in be XXXX fiscal enrollment Care fourth year quarter first of open is the expect Act. revenue by the to Affordable to This and fiscal quarter the higher the Census

Our quarter quarter ramp revenue Census as year, and fourth the with the to level the forecast begins is generate contract highest of quarter slow down. in down a revenue second fiscal the during third steps

that We earnings lower performance be quarter based first seasonality compared of anticipate will some the start that some contracts There quarter contracts sequentially fourth the fiscal up that. of are the to ‘XX. and for are ‘XX in fiscal that are causing

forecasting Based quarter on third we expectations, the our through of present are in ‘XX. earnings fiscal sequential improvement

Our to is sequentially fourth third helpful. fiscal down. wind hope ‘XX begins contract quarter compared lower as quarter of forecasted that’s I be to the to Census

Charlie Strauzer

you. just our contracts. any And That is the little to bit service that Thank fee rebids the for sense contract helpful. I the upcoming with is integrated know timing U.K. and very a kind of switching that? releasing of not gears then but

Bruce Caswell

Yeah.

on Assessments next timing about. going current is through run as so on standing Services They the Rick that and right. contract Health await the perspective, not relates to see a from of are to further integrated it services contract by are to Advisory XXXX or RFD news steps You an June have talked we and

Charlie Strauzer

you. Thank Great.

Lisa Miles

Thank you, Charlie.

Our next please. question

Operator

Sure.

KeyBanc. Next is from from coming Hooker question Donald

Your now is line live.

Donald Hooker

morning. Hey. Great. Good

that wondering guess, guess, these captured continues you if the number I sort warm. big opportunities my there. guess, So context the provide it’s to I question there, there’s a renewals, pipeline, I big some tracking CMS good could see, there’s in I am are there in of and renewal now that’s is, pipeline to of

about of discretionary project how work? considering a is, So secondly, of how first there sort discretionary how versus is year? is any think my way a that And Presidential do then, products next you much much versus have of can that question election from we new -- less kind we that of renewal that

Bruce Caswell

Don. questions, Great

talked Rick of that add commentary Let opportunity ask previously. color answer. my some has end large at a is he are first absolutely if all, about to right. some guess, you I or the of we There me start and

think I to $X pipeline or customer in the at billion related contract. of it’s the about operations the renewal contact CCO CMS

got is have weight is pipeline also giving about pipeline, that strong new say representation work there’s the of terms and you to towards in XX% but the would of representation there’s we our federal And I line. growth related the we in that to that a our color, there total about had are fundamental We think organic -- business in I talked discussion I driving. that return and pipeline, that think across geographies across that’s we

I’d our business, you and that that transactions relatively some services also contracts segments in are IT Human expect smaller we in to that Services. will or related of of preponderance see the you Health a be a of deals there across the even we And have type U.S. chasing as again have more types maybe company the consulting business be for that we would that would of BPO the say, business. larger pipeline of in the segments our, nature some

a not to reasonable really historically had it’s as dissimilar mix, So have a BPO-driven we company. what

power know, and trends of our governments are linked business which social going is you, about demographic which programs have obviously, a that Your -- that, staying though interesting. would fundamentally, what’s business is you to across long-term as don’t. It’s ones across kind question governors administrations. administrations linked of -- tell and is to I administer are critical to benefit kind programs

quilt into this marketplace to open even period fact, with there, even continues coverage adjusted. could patchwork of in and the Affordable go it’s this lengths that rates could Act into how under care a enrollment the in along, back that of the on year, great lower and and conversations we roll about lot think interesting Care administration the I next be

that Health core when administer something there’s of set government been will It’s much to granted. fundamentally, entitlement much, support way has harder Services that and -- those there’s But and to take Human programs populations. to an continue

transformational would then another place that programs specifically there years, got RFPs contract bit the we for agencies, And this agencies say, out whereas market five years, willing agency. federal that, are to in saw in talked being we I about three XX bring federal the years go budgets little really will and calls, mission-oriented to for prior that a on

transformation And that the would that bring color RFPs and able so, well. major, with those of across bit through certainty specific provides in being I of to they hope to then little agencies budget like, those some put funding the out obviously without driven programs types process, able it. continue they gained of were in expect as most metrics instances IT administrations a we to those

Donald Hooker

you other question guidance you. now then just a off the would sort sort so for managing us think ‘XX how you revenue, qualitatively of drop guess But fiscal beyond maybe or can -- what of I maybe getting really been to off, are rolling gave on sort I Got you ‘XX rolling quantitatively contract maybe mean, reallocate am get my I update maybe in -- And as Census with sure I regards fiscal lot, be is question you fiscal mean, the this on that with thoughts, off? just you ‘XX. resources, Census of updated about but any

Bruce Caswell

we to add of Rick to to start fiscal address happy that? just I then XXXX are to and the am to going speaking by the number to actions I’d that ask be the taking dynamic

Rick Nadeau

remarks the results $XXX Sure. In ‘XX. heard -- Census ‘XX earnings FY million. be call, and today, that you on we we $XX a short my about quarter as ‘XX $XXX than revenue and $XXX for actual less came fiscal were about We ‘XX prepared to for up from for estimated approximately second our little million and million million

‘XX revenue do to that to be goes from there revenue contract step a we FY have about should year second However, quarter we Census of with but $XXX incremental will in If into ‘XX. approximately there, ‘XX, $XXX shortfall FY for that FY what than that some million million. be will said of next you expect revenue total revenue call, less million the similar that down in and recover $XX

Bruce? to going doing that right-size we are can evaluate back can that through kick and we Bruce, mean, me to and of rest all that I Let sure will make do -- our programs, we assured we you but, everything

Bruce Caswell

growth the the federal where into the able of now on other have sales and agencies other so first capabilities side, of expansion, marketplace. right? take to been very from And excellent And opportunities of reconstruction has really Yeah. and side field will, is federal all, and focused, the organization, you if our are pipeline departments growth the Donald, then we which driven deeper we to that,

good We are in process a if an team We join you hires some in up in in had marketplace. in that quarter, have our made strategic making who’s the business. sales and leader Services play Health similar running organization sales the a and the of will Human U.S. progress there third building we excellent

I something we and Fundamentally, that and spoken to they markets it have you One will that is kind have sell at three to three and look back to kind through of to to have if of a go earlier paradigm lenses rings growth. I of address will. about it you or

business contracts driving expand innermost and programs need being off our opportunities serve. everything the the to and core customers new to taking current teams our that volume to we core increases The ring do into sell can they

we don’t The or be call currently completed. require don’t that but really second services an acquisition offer, be it would ring to markets

it U.S. certain So contractors Human programs. do would a great critical earlier perform fed Personnel sector Health we market can Services public regulations functions can Office relates and clarified whether private this it growth year our for to of Management benefit as the be in example some with initiatives, organic

merit they Medicaid quite perform of and Labor we the new we system like private open principles SNAP to And examples clear couldn’t can. that that and historically serve can populations long as that Department for sector and deeply couldn’t. up and that as programs programs regulation more as and that us meets for employment functions clarification the was contractor opportunities This

that we that acquisitions, core services to that same that they don’t got bet provide as new services out Now have we talking technology they opportunity, provide example can can you don’t new second. require the to tech or really new -- those the program areas, but expand because our customers are we

to suitability. The program third adjacencies for have ring up to away required we we evaluating imagine is continue would them at an new and and looking markets priority adjacent two where very disciplined acquisition you where are as markets is consistently

meet always thresholds when And are and pretty, strict Rick the disciplined at to very you of to want I’d a we terms forth. criteria of size, in can’t in are company say, giant They We look says, we need you at. growth go so that rate profitability, one. also the terms buy expected buy

So evolves. actionable the priority those of our in targets constantly markets and progresses universe being, dynamically we are as the point markets analysis new promoting also or or demoting as our deprioritizing list

And we like on company, platforms with for focused many FY obviously, the helps, our laser horizon, are as said capital for ‘XX Donald. create M&A can remains that that new that. we growth Hope of on have and times strategic deploying priority, the the

Donald Hooker

the Thanks Yeah. Appreciate for it. commentary.

Lisa Miles

Donald. Thanks,

please. question Next

Operator

is Styblo Jefferies. Thank Instructions] Dave question from you. [Operator next coming from Our

Your line live. is now

Dave Styblo

good for much Thanks morning. the and questions. Thanks

Bruce Caswell

Hi.

Dave Styblo

one segment. to was the related have First the Outside U.S. I

target is You all than a implying talked guidance less year The guys low of ‘XX. margin a something about little for here single-digit. fiscal reaching X% that

maturity on new is again curious that progress the are guys some that’s working book? then headwind contracts was you new or I that on And through other is that how talk U.K. So versus backdrop? about getting the a slower right as three related next that that margin there help economic single-digit now are much high you some and down years. if over is the from us break you to self-help more of help needing target help will the understand favorable that Can to

Bruce Caswell

And Rick’s there. in Great. jump to Great Dave. going question,

Rick Nadeau

Sure.

reach in XXXX. of goal for margins end the us that satisfied not to and are do the we a fiscal term. X% with be to we is, U.S. Dave by near a the have consider thing, I this First goal achieve Outside margin to plus

full look I little into to get range, you the that that do I we of more it, for of we toward but and year, fall short acceptable However, margin the when XX%. achieve of mentioned at a say, three-year the also I bit a X% the should said, at This goal to aiming want as year. end our X% is timeframe.

economies our the in prepared impacted accretive robust negatively mentioned contract remarks, in near-term. combination margin my the I of As in and the outlook that ramp Canada has component of down

We and so, contribution procurement of making this the think, opportunities. future not portfolio nature I sales across investments revenue into opportunities new working will affect the and these fall are longer see in year several expected but cycles, you are development large to The business years. on are we

are over working had right startup profitability programs have in anything the we I have that You are time. achieving new. that don’t and really think the United that there’s -- Kingdom toward

I be those long-term. profitable we have the last and think U.K. would they in are that things you just we that But slower programs will are it’s in think programs do profitability be over the about have to the to happy I been talking liked. will to the bit year. we have a same coming than they

also see our you United in Occupational I business that the think Health in should Kingdom. improvement

in made and clinically have will the related that We competitiveness platforms that customer both experience clinicians enhance technology some the and our investments improve should relating to place really are now the there.

I we do procurements its think, working we work are of large anything do and on better good else Bruce, add more winning that And all so, you to there. some want and those operations that? combined have

Bruce Caswell

by I the our macro continue are portfolio U.S. strategy land just expand to places work services to I related that of drivers. an outside clearly, we think we emphasis and cyclicality around -- last and element Just to the where your on business affected on question as our mean, employment last our question diversify

health unemployment. of opportunities and during period have a So to other that the we low government otherwise space into of needs move unprecedented address

so have up mobility of to a labor focus also those greatest call finding imagine and macroeconomic retention address that can this unemployed priorities more at change training as the mobility, issues first on government and had at the want this and also noting all skilling and requirements, we look areas, labor they It’s to including bit that of structurally in it, job environment design of cross-border they you immediate employment. needs programs look that they we in employing and look sustaining government individuals But that, at challenges climate. worth the,

Dave Styblo

end cash Okay. on million That’s by the of then year there inclusive you that you some have little second now, $XXX and your of guys flow one expectations great. $XXX million to calculus after capital of ‘XX deployment, cash a dividend And free over nearly considering fiscal grow just maybe payments. suggest

market cash I So are getting the of be disciplined the a to lot and deploying balancing right buybacks on been that does flexibility, price. want for amounts right for asset acquisition. you versus up to waiting how use have you lever management some versus are then, curious towards guys how your to cap, the want right know of to management that perhaps, But a you willingness gives obviously, of aggressive buybacks sure the X% very deal? and make for and

Rick Nadeau

So, Dave, this is Rick.

an at will and will our have strategic We lot at consistent remain a been active look number priority. and program. one we M&A We consistent M&A things. We run be do of

to think think, when the some allows opportunistic clean think proud deal like a just we are will comes at that and that I that and things ours us disciplined. we I right people that say good having we balance trigger. that we don’t very them. to I am and lot sheet profile very There’s don’t that pull look been for of a I And be we asking our have that think worth are think the price with along,

With respect that do buybacks. we say to we are respect opportunistic buybacks, with to those

think to don’t discipline. are that lose I going we So

think situation, at opportunistically. a to but to we we it do of opportunistic right I at million of buybacks. that the with topic use and authorization have will we time from and the look it’s when $XXX I continue Directors will it Board good respect will

Dave Styblo

much. Thanks Great.

Lisa Miles

Dave. Thanks,

Bruce Caswell

Thanks.

Lisa Miles

Next question, please.

Operator

Thank you.

from Analysis. coming is question next Sparacino Frank from Our First

Your line is live. now

Frank Sparacino

guys. Hi,

work talk impact marketplace, forecast. the what the that back in looks earlier just of those pieces, like to in state like Bruce, maybe, states comment I made about would be ACA still some down you requirements taken helpful. time, guess, together trying obviously, related these a me factors happening I then, away It when but just the a just if of secondly, positive, again talk a think whether year from had enrollment the this will last some have you a first, states. of activity, have own have clearly, be your the states. And around number to Thanks. one Maybe, in may healthcare.gov. same you and be that kind And about all don’t their assume level Medicaid at at number then, launching marketplace, Just it looks step you moving could year. would was of for a the you in MAXIMUS. that future, I move from to that’s look and know some some opportunity marketplaces negative, if And there’s positive versus MAXIMUS expansion

Bruce Caswell

questions. Absolutely, Good Frank.

middle ACA are in So it’s kind enrollment we enrollment since of the now. comment open of on to early

will of but last so, there I year we a decline I one had rearview was note about that tuned. stay X% so think, mirror kind in relative And is that, to XXXX, the

we to well What I General declines expected with and is of dynamic the you engagement would combination modeled the the and we tell this we advice really centers, pretty Dynamics completed as over the before look third-party like studied advisers took out that, customer the what extensively time.

dynamics And in reach portion managed a to dynamics just Part also Medicare not historically low may greater Medicare as care have the But to uninsured. the of of rates coming into there plan. elect as are ACA market you B -- population that relate the

have pre-acquisition modeling. All into what of I seen that based is And on trends we that baked our would consistent expected we our forecast. with the are say,

So that’s that piece.

state In activity, right. you are level terms of

the got probably a have our it have feel say, I -- about an creating nor business. dynamics. negatives. positives any do overall basically of market a opportunity of pressure number out that concerned the I’d positives on You putting view counterbalance it’s growth I don’t

election states it’s one us and moving the of strong in expansion Virginia, for for that positive on there, going states on with Medicaid in of Medicaid the example, to what’s are outcome we expanding for dynamics implementation, support are The that support. the

and program for are there years. We have to support Medicaid thrilled the

are of a that and state host in federal for -- based than move opportunities open have are great up a marketplaces, to does more of they going us. have state and states, the do dozen you half Similarly, that the said, moving, off exchange

credentials exchange the far and participate call those centers services insurance so are types for think market. health unparalleled are to provider that excited in We procurements, by largest we of are in our of we

if figure states -- Medicaid, of as how And to issues just may are well very just a health. And moment they want still address take similarly, we to determinants I try in to will emerging address best I social out positioned.

major or a in prior we on to be Phase about other their really Virginia gaps the whether population Medicaid did food project that were where what of spoke were determine the part it their West of I call surveys as I conducted in of that insecurity we we issues. other lives, enrolling areas

in The XX% survey Medicaid the range. survey response rate, was really for rate we and conducted response That’s the our high XX,XXX population. surveys

confidence lot And XX% In has fact, health broad in a response when have high in service. plans that that we you we identified gaps population, have interval that response there level. have these of data a rate, that that a are the there out a rate kill that at would a have to

a we shift technology working to take II these will to implement based client knowledge great community organizations curated our and Phase manage are partner into basically based to and the individuals. interact then So serve all going providing help capability members we then is that that organizations give us to the II and Phase a we coaches the company with there as where create platform they a of are virtual members now will with track have community to and network that

gaps get to services the them need that have network if additional and communicate help addressed. to need that be also the back ultimately they they through And

expansion a next have counties in to we that and pilot going needs. start of working are an really West Virginia levels that step pilot. great in that’s with And that So high reported of specific it’s

Managed as is like Care social think or to addressing there the I the administrators and an with market element with question because plans important program responsibility companies that’s of rests an determinants the open for MAXIMUS. that whether

Medicaid are long evolve more we to saying just can there -- continues and benefit So from way there’s that think, it. that’s I a evolve dynamics, of

Lisa Miles

questions, your address that Does Frank?

Frank Sparacino

Yes. Thank you.

Lisa Miles

And do you have any others.

Frank Sparacino

Thanks, No. Lisa. That’s it.

Lisa Miles

please. Our next question

Operator

question-and-answer gentlemen conclude teleconference. does our does today’s Ladies and conclude that That session.

and have today. time this thank at lines your We participation your disconnect day. wonderful you for may You a

Maximus (MMS) 19 Nov 192019 Q4 Earnings call transcript